Puerto Rico fiscal board doesn’t rule out legal action to enforce compliant budget
SAN JUAN – While the executive director of Puerto Rico’s Financial Oversight and Management Board, Natalie Jaresko, said Monday that the commonwealth budget for fiscal 2019 certified by the entity could be amended, the panel could take legal action if the government implements a budget that is not compliant.
At a news conference with reporters, Jaresko skirted questions as to whether legal action by the fiscal board would entail seeking the dismissal of the Title III bankruptcy process.
Jaresko, who spoke about the board-certified budget, said she was unaware that Gov. Ricardo Rosselló had signed the budget passed by the Legislature, which the board deems noncompliant.
“We will do everything in our means to enforce the budget as certified,” she said. “I don’t have a plan for you quite frankly…. Unfortunately, courts are the first thing that come to mind…. I think the law is clear; Promesa is clear, the fact that budgets have to be compliant with the fiscal plan.”
The board had certified its version of the budget over the weekend, contending that the Legislature’s budget for the government was not compliant with the fiscal plan. Hours after signing the legislature’s version of the budget, Gov. Ricardo Rosselló announced he was going to convene an extraordinary session to consider the House version of amendments to Act 80, the Wrongful Dismissal Act, that were proposed by New Progressive Party Sen. Miguel Romero.
Jaresko said the legislature’s $8.7 billion budget, which was smaller than the board’s version by $40 million was not compliant for several reasons, including the fact that it failed to take into account the repeal of Act 80, affecting revenues and projections for economic growth. The board’s budget did not include $60 million for the payment of government employees’ Christmas bonus. It also leaves out $50 million for municipalities and hundreds of millions for reinvestments.
The legislature’s budget excluded certain mandatory appropriations and budgetary controls that were in the fiscal plan, including $195 million to fund clean-water projects and back pay for police officers. It established inadequate budgetary controls, Jaresko said, adding that the “board required $130 million emergency reserve of which the Legislature only reserved $90 million.”
“The legislature’s budget finally misapplied right-sizing reform to many individual agencies,” she said, adding that Legislature increased its own budget. The board’s budget includes a $34 million fund for University of Puerto Rico students that is higher than the budget passed in the Capitol.
The Legislature’s budget also lacked requirements for weekly and monthly reports of actual revenue, spending and cash flows by agency, with the board also requiring monthly tracking of performance indicators for each fiscal reform measure initiative and quarterly reports on performance.
Although the $20.7 billion consolidated budget and the $8.7 billion general fund budget certified by the board reflects Puerto Rico’s “new normal” and sets a path to “economic recovery” and “sustained growth,” Jaresko noted the “living document” can be amended.
The consolidated budget emphasizes funding for public safety, education and healthcare services; funds police, social security and increases salaries for teachers and police officers; provides pay-as-you-go pension plan; does not reduce the budgets for the Comptroller’s Office and the Ethics Office; and incorporates federal disaster as well as other new federal funding sources.
In his televised speech, the governor said that the agenda for the special session would include tax reform and consider a bill to increase unemployment benefits.